SitePoint Sponsor

User Tag List

Results 1 to 4 of 4
  1. #1
    SitePoint Zealot
    Join Date
    Feb 2001
    Location
    Sheffield, England
    Posts
    112
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)
    Is advertising collapsing, and if so, why ?

    In the 'real ' world I've been unable to come across any scientific research that shows that advertising works. Lots of anectdotes, nothing else. Things like, 'Company X saw an increase in revenue when running such and such a campaign.'
    Some advertising is simply brand awareness- keeping up with the competition, who are also advertising like mad.

    Does anyone know why it appears that CPM rates for example are going downhill?

    Is it that there's now scientific evidence from traffic logs that people simply ignore advertising ?
    All the world's a stage......

  2. #2
    Who, me? Czar's Avatar
    Join Date
    Jan 2001
    Location
    Gold Coast, Queensland, Australia
    Posts
    317
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)
    Several factors have contributed to the current market downturn - some economic, some technical, some media-driven. A small summary of those factors follows:

    1. The big, cash-burning dotcoms who drove the golden days of online advertising have either gone under, been acquired at fire-sale prices by traditional companies, or have severely cut back their marketing budgets in order to focus on survival.
    2. Banner click-through ratios have decreased to fractions of a percentage point, which (rightfully or not) has led many marketers to see them as a weak medium. Of course, by focusing purely on accountable response ratios, many marketers have ignored branding theories.
    3. The global economy as a whole is on the brink of recession, and marketing budgets for all companies are traditionally reduced during such periods.
    4. The media who fueled much of the "irrational exhuberance" of 1998-99 with stories about dotcom millionaires and the superiority of the New Economy over the old, have done a 180 degree turn, and now seem to focus only on the decline of those former high-flyers that they themselves touted just a few years back. The abundance of stories about layoffs, failed business models, unprofitable dotcoms, etc, etc, contibute to the mindset that online advertising is not effective.
    5. With dotcom advertisers moving out, companies are turning to traditional advertisers to take their place - but this takes time. At present, only about 2% of all ad dollars are flowing online, regardless of the fact that the internet accounts for some 11% of people's media viewing time. Balance will be found, but it will take time.
    6. The medium is still in its seminal stages. It took decades for television and radio to get things right. Online advertising has evolved at an incredible rate, and has offered marketers the world. The failures have been well publicized, and the successes less so. It remains, though, a largely experimental medium for many, so their exposure to online advertising will be tentative for the next few years.
    Czar - Former SitePoint Alumni

    Want to make more money from your website?
    Join Geek/Talk to find out how!

  3. #3
    Sports Publisher mjames's Avatar
    Join Date
    Jan 2000
    Location
    Charlotte, NC
    Posts
    5,891
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)
    Excellent analysis and insight, Czar.

    I think it was because the whole dot-com thing that peaked in 1999 and 2000 was inflated and people had too much confidence and expectations for the industry. New dot-coms were opening up daily with little or no thought out business plan, they simply relied on online advertising. It was a snowball affect. Advertisers started to realize that people weren't clicking on their ads, and so fewer and fewer advertisers paid companies like BURST! Media and Engage, so these companies had to lower rates to bring in the advertisers. Now, we are stuck with those same low rates and things look to not be improving under the current advertising ideas, but new ones will have to be brought up to spark the market again. Advertising needs a new image, and we need to be innovative in creating new types of ads that are less intrusive to visitors, but please advertisers.

  4. #4
    SitePoint Zealot JamesCross's Avatar
    Join Date
    Mar 2001
    Location
    UK
    Posts
    138
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)
    Online advertising has started to suffer because of the level of accountability placed on it as a marketing medium. We we're discussing this subject in the office a couple of weeks ago and we came to some strange conclusions.

    Traditional Media Example:

    Your looking to sell your car. You decide to advertise in the local paper. You pay for a weeks worth of advertising, but no-one calls! what do you do? You advertise for a second week and maybe lower the price.

    Online Media Example:

    Your looking to sell your car. You decide to advertise in an online publication. You pay for a weeks worth of advertising, but no-one calls! But because of the reporting available to you, you know that 25 people read your ad, but non of them phoned you. What do you do? Cancel the ad, because online advertising doesn't work ;-)

    Accountability has shifted. Suddenly the publisher has become to blame for poor advertising results. We've lost the plot, surely factors such as:

    1. Advertising design.
    2. Pricing.

    Must have an effect on response rates. It doesn't stop there though. the publisher is now not only being held to blame for poor click rates, they're also being held accountable for conversion rates on a vendors site!

    It makes you want to throw in the towel and go back to publishing a traditional magazine. CPM rates over $150, and no accountability :-)


Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •